Within days of one another, the U.S. Court of Appeals for the Ninth and Second Circuits ruled—on issues of first impression for both—that ERISA expressly preempts state law breach of contract and promissory estoppel claims asserted by out-of-network providers who allege that preauthorization communications with claim administrators impose reimbursement obligations independent and irrespective of the
Sixth Circuit Rejects Arbitration Of Certain ERISA § 502(a)(2) Claims, Ruling That Employee Consent To Arbitration May Not Bind Plan In Putative Class Action
In Hawkins v. Cintas Corp., No. 21-3156, __ F.4th __, 2022 WL 1236954 (6th Cir. Apr. 27, 2022), the U.S. Court of Appeals for the Sixth Circuit ruled that an arbitration clause contained in certain individual employment agreements may be insufficient to compel arbitration of putative class action claims asserted under ERISA § 502(a)(2).
U.S. Supreme Court Denies Review Of Significant Second Circuit Ruling On The Scope Of California’s Anti-Discretion Statute And The Meaning Of A “Full and Fair Review” Under ERISA
The U.S. Supreme Court recently declined to review a significant decision of the Second Circuit which (1) clarified the scope of California’s statutory ban on discretionary clauses in life and disability insurance contracts, and (2) clarified the meaning of a “full and fair review” under the version of ERISA’s claims-procedure regulation applicable to all claims
Second Circuit Clarifies That Reclassification of Health Status That Limits Scope of Disability Benefits Does Not Constitute “Adverse Benefit Determination” Under ERISA Claims Procedures Regulation
In Ruderman v. Liberty Mut. Grp., Inc., No. 21-817, 2022 WL 244086 (2d Cir. Jan. 27, 2022), the U.S. Court of Appeals for the Second Circuit ruled that reclassification of a claimant’s disability from one that is physically-based to one that is psychiatrically-based does not constitute an “adverse benefit determination” within the meaning of
Third Circuit Clarifies Sufficiency Of Discussions Of Social Security Disability Insurance Awards In Adverse Disability Benefit Determinations Under Pre-2018 ERISA Claims Procedure Regulation
Plaintiffs seeking recovery of group disability benefits under ERISA-governed plans routinely argue that claim fiduciaries failed to adequately consider and/or account for decisions by the Social Security Administration (SSA) to award Social Security Disability Insurance (SSDI) benefits. As a result, federal courts are regularly tasked with evaluating the substance and sufficiency of discussions of SSDI awards (that are made a part of the administrative record) in adverse benefit determination letters.
Continue Reading Third Circuit Clarifies Sufficiency Of Discussions Of Social Security Disability Insurance Awards In Adverse Disability Benefit Determinations Under Pre-2018 ERISA Claims Procedure Regulation
D.N.J. Rejects Plaintiff’s Fee Request In Connection With State Court Remand Of Action Removed Under ERISA, Scaling Back Earlier Charge That Defendant’s Removal Was Nonsensical
In 2010, Chief Justice John Roberts observed that that ERISA is “an enormously complex and detailed statute.” Conkright v. Frommert, 559 U.S. 506, 509 (2010).
Some things don’t change. A recent decision out of the District Court of New Jersey exemplifies how even the most seemingly mundane procedural act — removal — implicates legal nuances with which courts continue to grapple.
Continue Reading D.N.J. Rejects Plaintiff’s Fee Request In Connection With State Court Remand Of Action Removed Under ERISA, Scaling Back Earlier Charge That Defendant’s Removal Was Nonsensical
ERISA Does Not Preempt Third Party Providers’ Unfair And Deceptive Business Practice Claims Against Health Insurer, Rules Ninth Circuit
In Hansen v. Group Health Cooperative, 2018 U.S. App. LEXIS 25033, (9th Cir. Sep. 4, 2018), two psychotherapists (“Providers”) sued Group Health Cooperative (“GHC”) in Washington state court, alleging GHC engaged in unfair and deceptive practices, in violation of Washington’s Consumer Protection Act.
The Providers claimed that GHC engaged in unfair and deceptive business practices by utilizing so-called Milliman Care Guidelines as its primary and exclusive criteria for authorizing mental health treatment. The problem with GHC’s use of these guidelines, according to the Providers, was that they: (1) were intrinsically biased against mental healthcare, (2) were utilized to avoid paying for mental healthcare required by Washington’s Mental Health Parity Act, and (3) enabled GHC to unfairly compete by employing its own psychotherapists and discouraging patients from seeking treatment from rival practitioners.
Continue Reading ERISA Does Not Preempt Third Party Providers’ Unfair And Deceptive Business Practice Claims Against Health Insurer, Rules Ninth Circuit
New DOL Disability Regulations Now Effective
Significant changes to the Department of Labor’s (“DOL”) rules regulating disability claims procedures are now in force. These new rules apply to claims filed on or after April 1, 2018.
ERISA directs the Secretary of Labor to establish and maintain rules which ensure that plan fiduciaries and insurance providers fully and fairly review claims for ERISA-governed benefits. The DOL’s rules regulating claims procedures are set forth at 29 C.F.R. § 2560.503-1, which contains detailed direction as to the claims handling process for both group health plans and disability plans. Historically, 29 C.F.R. § 2560.503-1 imposed similar obligations on group health plans and disability plans. That changed in 2010, however, with the implementation of the Affordable Care Act, under which claims procedures for group health plans were significantly modified, while procedures for disability plans remained untouched.
Continue Reading New DOL Disability Regulations Now Effective
Second Circuit Clarifies New York Anti-Subrogation Law Prohibits Offsets For Settlements; Declares Plan’s Choice-of-Law Provisions May Not Govern Offset And Subrogation Rights
The U.S. Court of Appeals for the Second Circuit has ruled that New York’s anti-subrogation statute, N.Y. Gen. Oblig. Law § 5-335(a), applies both to “offsets” for prospective benefit payments and to reimbursements for prior benefit disbursements. In so holding, the Second Circuit ruled that a Plan’s choice-of-law provisions may not be dispositive of which jurisdiction’s anti-subrogation statute will apply to govern disbursement and/or recovery of that Plan’s assets.
The case, Arnone v. Aetna Life Ins. Co., 860 F.3d 97 (2d Cir. 2017), arose after the plaintiff-appellant, Salvatore Arnone, a New York resident, was injured while working in New York at the site of a customer of his employer. Arnone filed for, and received, disability benefits through an ERISA-governed plan (“Plan”) insured and administered by Aetna. Arnone also commenced a personal injury action in New York state court against his employer’s customer. Arnone eventually settled the personal injury suit for a lump-sum payment.
Continue Reading Second Circuit Clarifies New York Anti-Subrogation Law Prohibits Offsets For Settlements; Declares Plan’s Choice-of-Law Provisions May Not Govern Offset And Subrogation Rights
Fifth Circuit Maintains Default Deferential Standard Of Review In Denial Of Benefit Claims, But Suggests It May Soon Be Overruled
For more than twenty-five years, the law of the Fifth Circuit has been that health and disability benefit denials based on factual determinations (e.g., whether a beneficiary is disabled or whether a treatment is medically necessary within the meaning of a plan) are reviewed by courts under an abuse of discretion standard, regardless of whether a subject plan includes discretionary “Firestone” language. Pierre v. Connecticut General Life Ins. Co., 932 F.2d 1552, 1553 (5th Cir.) cert. denied, 112 S. Ct. 453 (1991).
The Fifth Circuit’s so-called “Pierre deference” was recently challenged in the case of Ariana M. v. Humana Health Plan of Texas Inc., No. 16-20174 (5th Cir. Apr. 21, 2017). In Ariana M., the plaintiff argued that a Texas statute prohibiting the use of discretionary clauses in insurance policies overrode the Fifth Circuit’s default Pierre deference, under which district courts are directed to “reject[ ] an administrator’s factual determinations in the course of a benefits review only upon the showing of an abuse of discretion.” Dutka ex rel. Estate of T.M. v. AIG Life Ins. Co., 573 F.3d 210, 212 (5th Cir. 2009). The plaintiff argued that Texas’s specific ban on the use of discretionary language in insurance policies precluded the district court from conducting a deferential review of Humana’s factual findings, and thus compelled application of the more favorable de novo standard.
The Fifth Circuit rejected the plaintiff’s argument, unanimously finding that “Texas’s anti-discretionary clause law concerns what language can and cannot be put into an insurance contract in Texas. It does not mandate a specific standard of review for insurance claims.B” Consequently, “Texas’s anti-discretionary clause law does not change [the Fifth Circuit’s] normal Pierre deference”, and courts in the Circuit will continue to apply Pierre deference to all factual determinations even in cases arising out of insurance policies issued in Texas. In this regard, Ariana M. preserves the status quo.
Continue Reading Fifth Circuit Maintains Default Deferential Standard Of Review In Denial Of Benefit Claims, But Suggests It May Soon Be Overruled